Encyclopedia of Law and Economics

Living Edition
| Editors: Alain Marciano, Giovanni Battista Ramello

Development and Property Rights

  • Peter J BoettkeEmail author
  • Rosolino A Candela
Living reference work entry
DOI: https://doi.org/10.1007/978-1-4614-7883-6_3-1

Abstract

This chapter argues that economic development originates not from the gains from trade and specialization under a division of labor but fundamentally from an institutional framework of property rights which permits the gains from trade and innovation that emerge on a societal wide scale. It is this framework that enables the transition from small-scale trading and capital accumulation to medium-scale trading and capital accumulation and finally to large-scale trading and capital accumulation. All of humanity was once poor; those societies that have been able to escape from poverty are those that were able to get on this development path by adopting the institutional framework of property, contract, and consent. We argue that well-defined and exchangeable private property rights yield economic growth by operating as a filter on economic behavior – the establishment of property rights embedded in the rule of law weeds out unproductive entrepreneurship and the corresponding politicized redistribution of property rights, with rent-seeking and predation as its consequence, and engenders instead productive entrepreneurship and a more efficient allocation of property rights and with that a realization of the gains from trade and the gains from innovation. The fundamental cause of economic development, we argue, is the institution of private property, as it is this institutional framework that results in productive specialization and peaceful cooperation among diverse and disparate individuals.

Keywords

Entrepreneurial Activity Private Property Capital Accumulation Institutional Framework Real Income 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in to check access.

References

  1. Alchian AA (1961[2006]) Some economics of property. In: Property rights and economic behavior. The collected works of Armen A. Alchian, vol 2. Liberty Fund, IndianapolisGoogle Scholar
  2. Alchian AA (1965[2006]) Some economics of property rights. In: Property rights and economic behavior. The collected works of Armen A.Alchian, vol 2. Liberty Fund, IndianapolisGoogle Scholar
  3. Bauer P (2000) From subsistence to exchange and other essays. Princeton University Press, PrincetonGoogle Scholar
  4. Baumol WJ (1990) Entrepreneurship: productive, unproductive, and destructive. J Polit Econ 98(5):893–921CrossRefGoogle Scholar
  5. Boettke PJ (1994[2001]) The political infrastructure of economic development. In: Calculation and coordination: essays on socialism and transitional political economy. Routledge, New YorkGoogle Scholar
  6. Boettke PJ, Coyne C (2003) Entrepreneurship and development: cause or consequence? Adv Austrian Econ 6:67–87CrossRefGoogle Scholar
  7. Buchanan JM (1968[1999]) The demand and supply of public goods. The collected works of James M. Buchanan, vol 5. Liberty Fund, IndianapolisGoogle Scholar
  8. Demsetz H (1967) Toward a theory of property rights. Am Econ Rev 57(2):347–359Google Scholar
  9. Easterly W (2009) Can the West save Africa? J Econ Lit 47(2):373–447CrossRefGoogle Scholar
  10. Hayek FA (1945) The use of knowledge in society. Am Econ Rev 35(4):519–530Google Scholar
  11. Holcombe RG (1998) Entrepreneurship and economic growth. Q J Austrian Econ 1(2):45–62CrossRefGoogle Scholar
  12. Kirzner IM (1973) Competition & entrepreneurship. University of Chicago Press, ChicagoGoogle Scholar
  13. Kirzner IM (1988) Some ethical implications for capitalism of the socialist calculation debate. Soc Philos Policy 6(1):165–182CrossRefGoogle Scholar
  14. McCloskey DN (2010) Bourgeois dignity: why economics can’t explain the modern world. University of Chicago Press, ChicagoCrossRefGoogle Scholar
  15. Mises L (1920[1975]) Economic calculation in the socialist commonwealth. In: Hayek FA (ed) Collectivist economic planning. August M. Kelley, CliftonGoogle Scholar
  16. Mises L (1922[2008]) Socialism: an economic and sociological analysis. Ludwig Von Mises Institute, AuburnGoogle Scholar
  17. Murphy KM, Shleifer A, Vishny RW (1991) The allocation of talent: implications for growth. Q J Econ 106(2):503–530CrossRefGoogle Scholar
  18. Murrel P (1991) Can neoclassical economics underpin the reform of centrally planned economies. J Econ Perspect 5(4):59–76CrossRefGoogle Scholar
  19. Pejovich S (1998) Economic analysis of institutions and systems, revised 2nd edn. Kluwer, NorwellCrossRefGoogle Scholar
  20. Phelps E (2013) Mass flourishing: how grassroots innovation created jobs, challenge, and change. Princeton University Press, PrincetonGoogle Scholar
  21. Rosenberg N, Birdzell LE Jr (1986) How the West grew rich: the economic transformation of the industrial world. Basic Books, New YorkGoogle Scholar
  22. Sachs JD, McArthur JW, Schmidt-Traub G, Kruk M, Bahadur C, Faye M, McCord G (2004) Ending Africa’s poverty trap. Brook Pap Econ Act 2004(1):117–216CrossRefGoogle Scholar
  23. Smith A (1776[1981]) An inquiry into the nature and causes of the wealth of nations. Liberty Fund, IndianapolisGoogle Scholar
  24. Tullock G (1967) The welfare costs of tariffs, monopolies, and theft. West Econ J 5(3):224–232Google Scholar

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Department of EconomicsGeorge Mason UniversityFairfaxUSA